Akerly v. Vilas

Downer, J. These are cross appeals from the same judg. ment. Aherly brought his suit to foreclose a mortgage given by the defendant Vilas to secure three bonds conditioned for the payment of $13,000, which is the purchase money for certain lands in Prairie du Chien, and in Grant and Green counties. The first question for our consideration is: Has Vilas the right to rescind the contract for the purchase of these lands ? The title to the lands was in Louisa S. Lord, wife of Frederick ~W. Lord, and Jay Camiah Aherly. A part of the lands, at Prairie du Ghien had been conveyed to the trustees of Prairie du Ghien Land Companies No. 1 and No. 2, and was represented by 100 shares of Go. No. 1 and 150 shares of the stock of Co. No. 2, held and owned by Aherly and Mrs. Lord. A conveyance, being a full covenant deed of the lands at Prairie du Ghien, was 'executed to Vilas by Aherly and Mrs. Lord, acting by Mr. Lord as their attorney in fact, in which Mr. Lord joined, bearing date September 4th, 1855; and in this deed, after conveying certain lands described by lots and blocks, they assign the 250 shares of stock, and transfer or convey all the lots, blocks, stock and property of every — 104 — description, owned by them either jointly or separately, in Prairie du. Chien. Mr. Lord, not having any authority from Akerly to convey the lands in Grant and Green counties, being-240 acres owned jointly by Mrs. Lord and Akerly, at the same time executed and delivered to Vilas an agreement by which he, -Frederick W. Lord, agreed, by the first of October, 1855, to execute and deliver to said Vilas a deed of the last mentioned lands ; and to procure from Mrs. Lord and Akerly a good and sufficient deed of the same lands, and deliver the same to Vilas; and in case of a failure, Frederick W. Lord agreed to pay to Vilas, on his demand therefor, the fall cost and value of the Green and Grant county lands, as fixed and settled damages, to be paid to said Vilas or deducted from the first payment on the bonds. Lord also executed to Vilas another agreement of the same date, in which he agreed to send to Vilas, duly assigned to him, the certificates of shares in the land companies held by the grantors in the deed of conveyance to Vilas. The deed of lands in Grant and Green counties, and the certificates, have never been delivered to Vilas. Akerly filed his bill in the United States district court for the district of Wisconsin to rescind the sale and set aside the deed ; and Vilas, in November, 1856, answered that bill, admitted that he had taken possession of the lands conveyed to him, and averred that he had sent the first year’s interest on he bonds to the American Exchange Bank (where it was made payable), at or before the time it became due, and that it remained there still for Mrs. Lord and Akerly, unless they had received it. He denied all fraud, and maintained the validity of the transaction. Vilas states in Ms testimony, that in January, March, May and June, 1856, and subsequently, he sold and conveyed portions of the lands, and received about $4,500 for those sold; also, that he leased and received rent for a part after that time, and has never been disturbed in his possession; that up to — 105 — the spring of 1859 he tried the best he could to possess and enj oy them; and sin e that time he has taken charge of the prop-perty to await such decision as might be made with regard to his rights thereto. At the November term, 1856, the trustees of Land Go. No. 2 commenced a suit in the Crawford circuit court for the partition of the lands held by them as trustees. To this action Vilas was a defendant, and set up his claim as owner of the land and of the certificates of shares in the land companies assigned to him by the deed from Alcerly and Mrs. Lord. Akerly also was defendant, and filed an answer, which was struck off; and he filed another, in which he claimed the land, and set up the pendency of the suit in the United States court to rescind the sale and cancel the deed: At the June term, 1859, Akerly withdrew his answer, and he had previously discontinued the suit in the United States court; and soon thereafter he commenced this action to foreclose the mortgage executed to him and Mrs. Lord to secure the purchase money of the bonds, and avers that Mrs. Lord has assigned her interest in the bonds and mortgage to him. It is obvious from these statements that to rescind the contract at this time, or grant any relief equivalent to to it, would violate nearly every principle which courts of equity have long acted on in such cases. If Vilas ever had the right to rescind, he certainly had a knowledge of all the facts which would entitle him to a rescission when he defended the suit of Akerly in the United States court; when he sold at divers times portions of the lands conveyed to him ; when he paid or offered to pay the interest on the bonds; and when he maintained his title in opposition to the claim of Akerly in the partition suit. Either one of these acts, it appears to us, was a ratification of the contract. The delay of several years to tender back a deed of the lands conveyed to him, and to seek, himself, a rescission, is alone conclusive against his claim to rescind. — 106 — But it is said that the deed, bonds and mortgage were delivered conditionally, or that the bonds and mortgage were never delivered. We think the answer of Vilas to the bill in the United States court, and his testimony, are clear and conclusive evidence to the contrary. 2. Does the defendant, in the first defense in his answer, state facts constituting an entire or partial defense to the action ? He sets up the agreement respecting the conveyance of the Grant and Green county lands and the delivery of the certificates of stock, and avers the non-conveyance of the lands and the non-delivery of the stock. He sets out also the prosecution of the suit in the United States court, and the defense of the partition suit, by AJcerly. Lord, in his agreement with Vi-las, stipulated that if the Grant and Green county lands were not conveyed by the first of October, 1855, “he would pay to said Vilas, on his demand therefor, the fall cash value of the same as fixed and settled damages, to he paid to said Vilas or deducted from the first payment on the bonds.” It appears from this that the non-conveyance of the Grant and Green county lands was not only not to be any cause for rescinding the contract, but that in case of failure, by the first of October, to deliver the deed conveying them, the defendant had a right after that to refuse the deed, and insist on their value being paid to him or deducted from the first payment on the bonds. These lands are a part of the consideration of the bonds and mortgage, and it is but equitable that their value, whatever it may be, should be deducted from the plaintiff’s claim; and to this extent there is a failure of consideration, and the defense is good. 8. Is the defendant entitled to any relief in this action by reason of the non-delivery of the certificates of stock in the land companies ? It was urged upon the argument that the certificates and their delivery were a part of the consideration of the bonds and mortgage. But we hardly think this position tenable, after the execution and delivery of the deed to Vilas — 107 — in which these very certificates were sold and transferred to him, and all the interest of the grantors in the lands represented by them. The lands were the only consideration. The nondelivery of the certificates could affect the consideration only as it affected the title to the lands. If the title in Vilas would be the same without their delivery as with it, then the failure to deliver them is not a partial failure of consideration. We see no reason why, if AJeerly and Mrs. Lord owned the certificates when the deed to. Vilas was executed, the deed did not convey, transfer to and vest in Vilas all the legal and equitable title which the grantors had, as fully as if there had been a formal delivery of the certificates. If Yilas had had the possession of the certificates, the land companies or their trustees might, perhaps, have more readily acknowledged his rights; and in case of litigation, proof of his interest might have been more easily made. But he had in equity the title without the certificates ; and if they had been delivered to him, he would then have had only an equitable title. We think, however, the plaintiff and Mrs. Lord ought to have delivered the certificates. No good reason is shown why they did not. But we are of opinion that the defendant is not entitled to recover damages in this suit for their non-delivery. Durlcee v. Siringham, 8 Wis., 1. He may have a remedy, perhaps, on the personal contract of Mr. Lord. 4. The next question is: Was the defendant rightly compelled to elect which of the defenses set up in his answer he would rely upon? Were the defenses in fact inconsistent ? We are unable to find in the first defense set out in the answer, averments of facts showing that either the deed to Vilas or the mortgage to Alcerly and Mrs. Lord were delivered conditionally, or averments showing that either of these instruments is not valid and in force. The words “ conditional sale ” are used in the first defense and applied -to the transaction, but the facts — 108 — set out clearly, to our minds, make an absolute sale of tbe Prairie du Chien lands. It may be that the defendant intended to ayer that the bonds and mortgages were delivered to Frederick W. Lord with the understanding that they should not be delivered to the mortgagees before the certificates were delivered and the Grant and Green county lands were conveyed, but there is no averment in the answer which, taken in connection with tbe others, can be considered an averment to that effect. He avers that he “ delivered the bonds and mortgage to Frederick W. Lord, and never delivered the same, or caused them to be delivered, to the plaintiff or Mrs. Lord, or to any other person or persons in any manner whatsoever.” Frederick W. Lord was the agent of the plaintiff and Mrs. Lord, and came to Wisconsin with powers of attorney from them for the very purpose of making sale of their lands, as the defendant avers, and did sell and convey those at Prairie du Chien, by virtue of the powers of attorney, to the defendant, and delivered the deed to him, and at the same time agreed to procure a conveyance of the Grant and Green county lands and deliver that and the certificates of stock to the defendant. When, therefore, the defendant avers that he delivered the bonds and mortgage to Mr. Lord, he avers a delivery to the plaintiff and Mrs. Lord by delivering the same to their agent; nor can the averment which immediately follows, that he never delivered the same or caused them to be delivered to the plaintiff and Mrs. Lord, or to any other person or persons, in any manner whatsoever, negative or qualify the effect of the delivery to Lord as agent of the plaintiff and Mrs. Lord. To have had such effect, he should have shown by affirmative averment that they were delivered to Mr. Lord for some other purpose than delivery to his principals, or that they were not to be delivered to them until the stock or the deed of the Grant and Green county lands, or both, were delivered to the defendant. And to put the unconditional delivery of the deed to Vilas beyond all question, — 109 — Vilas himself ayers in his first defense that he went on and sold part of the lands therein conveyed to him. And if the deed to Vilas was delivered unconditionally, it requires certainly very clear and unequivocal averments that the bonds and mortgage were delivered to Mr. Lord not as a delivery to his principals but for some other purpose, and that purpose should clearly appear. It follows that the first defense is not inconsistent with the counter-claims, and the circuit court erred in compelling the defendant to -elect which defense he would rely upon, unless the counter-claims are such as could not be set up as counter-claims in this action. 5. We will next consider whether the first counter-claim of the defendant is good and well pleaded. It sets out, inter alia, the deed of the lands to Vilas, including the covenants therein, and avers breaches of the covenants. Can we take into consideration this cause of action in this case, and allow the defendant to recover thereon ? Before the code it was well settled, that in suits brought to foreclose mortgages for the purchase money, in which the mortgagor, being in possession of the lands, set up a partial failure of title as a defense, without averring an actual eviction or an action of ejectment brought, or that he was in any way disturbed in his possession, the court would not interfere, but leave him to his action at law. Van Wagoner v. McEwer, 1 Green Ch. Rep., 412; Abbott v. Allen, 1 Johns. Ch., 213; Pratt v. Gilchrist, 1 Sandf., S. C., 118; Simpson v. Hawkins, 1 Dana, 305; Rawle on Cov. for Tit. (3d ed.), 676 to 686. Courts of equity declined to go into such defenses, because title to lands could better be tried in actions at law, and the damages were often unliqui-dated and not the subject of set-off; and also because the possession of the defendant, being undisturbed, might ripen into a perfect title. But the code allows a counter-claim to be set up in an answer to a foreclosure action, as well as in others. It is no objection to such counter-claim or claims, that the dam — 110 — ages are unliquidated, or that the claims are legal or equitable, or both; for claims legal or equitable, for liquidated and unliquidated damages on contract, may all be set up in the same answer. The defendant who sets up by way of counter-claim a cause of action based upon the covenants in a deed, is entitled to recover the same damages as be would have recovered if be bad brought a separate action on those covenants. If be declares upon the covenant of seizin and alleges breaches, it is no defense to his claim, that be is in undisturbed possession of the premises. He has a right to recover his actual damages, whatever they may be, the same as in a suit at law before the code. Walker v. Wilson, 13 Wis., 522; Hall v. Gale, 14 Wis., 54. Can the defendant set up the breach of the covenants in the deed as a counter-claim without making Mrs., Lord, who is jointly liable on the covenants (inasmuch as these are covenants made by her on conveying her separate property), a party? If the defendant Vilas bad brought a separate action on the covenants in the deed to him, be must have made all the grant-tors, who were liable on the covenants, or the survivors, parties; or advantage of the want of parties might have been taken by demurrer or answer. But if not so objected to, the defect would have been waived. The same holds true as to a counterclaim. Schubert v. Harteau, 34 Barb., 449; Briggs v. Briggs, 20 Barb., 447; Cummings v. Morris, 25 N. Y., 625. There being no objection in the replication of the plaintiff because Mrs. Lord is not before the court, we must bold the first counter-claim, so far as it sets out a cause of action on the covenants, good. It follows that the circuit court erred in compelling the defendant to elect which of the defenses set up in his answer be would go to trial on, and in striking out the first counter-claim. 6. Can the defense of malicious prosecution, or slander of title, be set up as a counter-claim in this action ? If so, it is because it is allowed by the first subdivision of section 11, — 111 — chapter 125, R. S., which gives the defendant the right to set up as a counter-claim “ a cause of action arising out of the contract or transaction set forth in the complaint as the foundation of the plaintiff’s claim, or connected with the subject of the action.” Is the claim for damages for the alleged malicious prosecution, or slander of title, a cause of action arising out of the bonds and mortgage set out in the complaint ? Clearly not. If the slander of title constitutes a cause of action at all, it arises out of Akerly's suit in the United States court, or out of the partition suit, or Akerly's pleadings or proceedings in those suits. It arises out of a torongful act or acts, and not out of the contract set out in the complaint. Is it connected with the subject of the action ? How is it connected with the mortgage ? It is based upon and directly connected with the alleged wrongful acts of Akerly in the former suits. Those suits and acts were connected with the deed to Vilas, and the deed with the bond and mortgage. Thus the slander of title, or malicious prosecution, is indirectly or remotely connected, if at all, with the subject of the action. We are of opinion that a cause of action set out in a counter-claim is, within the meaning of the statute, connected with the subject matter of the plaintiff’s action, only when it is directly connected ; or so connected that a cross bill would have been sustained, or recoupment allowed, under the former practice. This excludes the counter-claims setting up slander of title, or malicious prosecution. On the appeal of Akerly, the judgment of the circuit court must be reversed, with costs, and the cause remanded for further proceedings. If the appeal of Vilas had been heard by itself, the judgment would have been affirmed; for it is not, on the whole, to his prejudice or injury. But as the judgment must be reversed on the appeal of Akerly, and as there was error in entering the order compelling Vilas to elect which of — 112 — the defenses set up in bis answer be would go to trial on, that order, on bis appeal, must be reversed, with costs, except bis disbursements for printing the evidence. By the Oourt. — Ordered accordingly. DixoN, O. J., dissents.